How does reorganization work in a Chapter 11 bankruptcy?

In a Chapter 11 bankruptcy filing, a person or business can seek to reorganize their debts and assets through a repayment plan. Reorganization is a process that allows the filer to develop a plan to restructure their assets and liabilities in a way that can produce greater repayment capacity than in a Chapter 7 bankruptcy. The first step in reorganizing debt is needing to create a repayment plan that will allow the filer to make payments on their debts. This plan needs to be accepted by the creditors, as well as approved by the court. Once it is approved, the court will issue a confirmation order that outlines the repayment plan. The repayment plan must include information on how the filer plans to repay their creditors, and what expenses and assets will be used in the process. This might include selling off assets to generate funds, or simply negotiating with creditors to agree on more manageable payment terms. The repayment plan will also need to include a realistic timeline for repayment that is agreed upon by all the involved parties. In Indiana, Chapter 11 bankruptcy laws force creditors to accept the repayment plan that is proposed by the filer, as long as it meets certain criteria and the court approves it. Once all the terms of the reorganization plan have been agreed upon, the filer will have the chance to stay current on their debt obligations and get a fresh start.

Related FAQs

How does reorganization work in a Chapter 11 bankruptcy?

Related FAQs

Related Blog Posts